Heavy Undertakings for Lightest Metal

By Lori Musser

In a feature story from Issue 4 of Breakbulk Magazine, we take a deep dive into lithium mining in the U.S., and discover how project cargo supply chains need to be built from scratch to support the buildout of the country's energy transition.

Mid-century American films immortalized down-on-their-luck prospectors astride crotchety burros, staking claims across the deserts of Nevada. In a Biden administration-triggered twist to transition the U.S. to clean energy, those prospectors are back, minus the burros. This time they are looking for lithium, which is a critical mineral in electric vehicle battery production.

The Nevada Division of Minerals reported 20,127 active claims as of April 30, 2023, almost all for lithium or lithium brine. These claims span 18 hydrographic basins.

Lithium, sometimes called white gold, is a soft alkali metal. It is scattered around the globe, usually found in low concentration in rocks and brines and clay. In Nevada, and indeed in all of the U.S., there is only one active mine, the Silver Peak Mine. It is operated by the world’s second largest lithium company, North Carolina-based Albemarle Corp. The Nevada operation removes lithium-laced brine from underground aquifers and deploys evaporation ponds that leave behind the lithium and other minerals.

The U.S. is currently supplying 1 percent of world lithium, nowhere near what is needed for the American energy transition, according to Tim Crowley, vice president of government and community relations at Lithium Americas. He said: “The U.S. hasn’t built a lithium production facility since the 60s. We are [almost] completely dependent on foreign sourcing. Most comes from South America or Australia, but it is processed in Asia, predominantly in China.”

The U.S. is vulnerable from a supply standpoint, and a national security standpoint. There is a tremendous push to begin to grow the domestic supply of lithium and other minerals critical for the energy transition.

According to the Federal Consortium for Advanced Batteries’ National Blueprint for Lithium Batteries 2021- 2030, the global lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.

A 2021 report by Wood Mackenzie confirms growing demand. Wood Mackenzie’s base case scenario expects EV penetration to reach 23 percent by 2030. “The transition to the massive scale-up of EVs naturally points to an equally high demand for Li-ion batteries. By 2040, 89 percent of Li-ion battery demand will come from the EV sector.”

Max Reid, research analyst at Wood Mackenzie said: “Underneath the surface of this electric future lies a relatively young supply chain struggling to keep up. The Li-ion battery demand market can fluctuate over months and expanding upstream and midstream to produce battery materials involves lead times of several years.”


Administration’s Push for Domestic Lithium

The Biden Administration has incentivized EV production and, directly and indirectly, lithium production, through its Inflation Reduction Act. For example, there are now Advanced Manufacturing Production Credits (for producing materials such as battery cells, battery modules and critical minerals), and special Defense Production Act Funding of US$500 million for additional incentives to spur onshoring for critical minerals. A major pool of capital is available through the Bipartisan Infrastructure Law, with provisions to spark investment in mineral and raw materials supply for battery makers.

John Bozzella, president and CEO of the Alliance for Automotive Innovation, cast his support for these developments in a recent statement. He said: “There is more than US$15.5 billion in incentives and grants to ensure the United States is building automotive supply chains and a globally competitive battery manufacturing platform.” He emphasized that the Inflation Reduction Act will help expand the production of EVs … and locate raw material and battery components on American soil.

Now that batteries for new EVs have to be sourced in the U.S. (or a very short list of favored countries) to qualify for tax credits, entirely new supply chains from mine to dealership will need to develop. The U.S.’ new climate policy doesn’t plan to rely on the dominant global supplier of lithium, China. So the Department of Energy is busy awarding sizable loans and some grants to lithium companies.

Lithium Americas is one loan recipient. In February 2023, it received a Letter of Substantial Completion from the U.S. Department of Energy Loan Programs. “We are now in due diligence,” Crowley confirmed. The loan is expected to cover up to 75 percent of capital costs for Phase 1 construction at Thacker Pass in northern Nevada.

Mining and processing companies are announcing new lithium properties and developments throughout Canada and the U.S. For example, lithium brine extraction and technology development company Prairie Lithium announced in 2021 that it had acquired 188,000 acres of subsurface mineral permits in Saskatchewan, Canada.

In June 2022, Albemarle Lithium CEO Eric Norris unveiled plans to construct a lithium processing plant in the U.S. Southeast with a capacity of 100,000 tons per annum by 2030. The new plant would be supplied with lithium produced by Albemarle’s currently mothballed Kings Mountain mine in North Carolina, which, the company said, could be reopened by 2027. In December 2022, Lithium One Metals announced that it signed option agreements to acquire six lithium properties in northwest Ontario in Canada. Also in December, Koba Resources acquired two Canadian lithium-pegmatite projects.


Spotlight on Thacker Pass

The biggest industry news by far is for the massive new clay-based lithium mine and processing facility now under development at Thacker Pass. General Motors, with 10 percent of shares and rising, is a key investor in this project.

According to Crowley, GM will have access to all the Thacker Pass product for the first ten years. A fee scale has already been negotiated. For now, other buyers will have to look elsewhere for American product.

Ailie MacAdam is president of Bechtel’s Mining & Metals global business unit. She confirmed that Bechtel is the engineering, procurement, and construction management contractor selected by Lithium Americas for the 40 ktpa lithium hydroxide plant.

Aquatech International was awarded the contract for the magnesium sulfate and lithium carbonate chemical plants. EXP Global was awarded the sulfuric acid plant contract with MECS, Inc. technology.

The Thacker Pass project may prove to be pivotal in the U.S. energy transition.

MacAdam said to Breakbulk: “Our role is to enable the U.S. green energy transition by applying our experience in complex projects and EPC execution for mining and other customers. We’re seeing growth signals not only in lithium but also nickel, copper, and rare earth elements.”

Bechtel’s expertise in process design, engineering, constructability, modularization, pre-commissioning and start-up, and project management tools, undoubtedly played a role in its selection for the project, but another important factor, MacAdam said, was Bechtel’s strong relationships along the supply chain.

“Our customers are keen to meet the urgent demands of the energy transition. We can support this through our Centers of Excellence which house our teams of experts in specialty areas such as process technology, plant design and bulk material handling,” MacAdam said.

At Thacker Pass, lithium is found in large quantities at the site of a long-extinct super volcano, where clay deposited in a basin millions of years ago can now be relatively easily accessed with open-pit mining.

Thacker Pass is the only new lithium project permitted at this time in the U.S. Other projects are being advanced, but Thacker Pass is the largest. “There is not enough supply to fulfill demand. The industry is in a catch-up mode. The U.S. needs more projects of our size,” Crowley said to Breakbulk.

The US$2.3 billion Thacker Pass project will build a mine and chemical processing facilities. Approximately US$2.1 billion will be invested in the processing facilities. Production of lithium carbonate will begin at about 40,000 tons per year. By comparison, the U.S. produces about 5,000 tons per year. “There is a 40-year mine life. Eventually, production will increase to 80,000 tons per year. The facility wants cash flow before scaling to size,” Crowley said. He added that 40,000 tons of lithium carbonate would fill the need to make about one million EVs annually in the U.S./Canada.

Thacker Pass Lithium carbonate is slated for use in GM’s proprietary Ultium battery cells.


Nascent Supply Chains

In March, Thacker Pass initiated its “early works” construction – water, road, fencing, security, concentration pond, and so on. “Construction will ramp up and earthwork will start soon,” Crowley said. “There is a 30-month buildout, but the clock hasn’t started,” he added.

Project cargo for the buildout is mostly transiting through Winnemucca, Nevada, a rail site since the 1860s when the transcontinental railroad laid tracks through the town. The town sits about 50-60 miles from Thacker Pass.

Lithium Americas is building a transload facility in Winnemucca. The company uses reagents, as well as sulfur, caustic soda, lime, diesel fuel – most will arrive by rail in bulk then be transloaded to trucks.

“The finished lithium carbonate will move out of the processing facility in super sacks by truck,” said Crowley.

The supply chain for lithium is complex. “Once the chemical is made, it is turned into a cathode, and then it is turned into battery cells that are then incorporated into battery packs before finally going into the EVs,” Crowley said.

GM is reportedly investing more than US$7 billion in a venture with LG, building three battery plants, one each in Ohio, Tennessee, and Michigan. A US$2.5 billion Department of Energy loan was awarded to assist. Other auto manufacturers are investing similarly.

Entire supply chains are being built from scratch for the U.S. energy transition. There are opportunities in project logistics for the many lithium mines and processors, battery plants and EV production facilities that will be constructed in the U.S. and the world over. And there are opportunities to transport the raw materials and input components used by all these operations, as well as their output.

American lithium supply chains are expected to be a lead player in achieving U.S. greenhouse gas reduction goals.


TOP PHOTO: Thacker Pass construction. CREDIT: Lithium Americas